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Monday, Dec. 27, 2004

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  ``That massive storm in the Midwest shut down gasoline demand and didn't do much for heating demand,'' said Ed Silliere, vice president of technical research at Energy Merchant Corp. in New York.

Silliere said the weekend weather and expected warm spell later in the week come as a ``stomach punch to anyone who was long,'' or betting that oil prices would rise.

``This is just a reaction to where the [London] market went on Friday,'' said Esa Ramasamy, oil editorial manager for energy reporting agency Platts in Singapore.

The world's largest earthquake in 40 years, which hit parts of Asia on Sunday, was so far not a factor, traders said, though it could depend on how badly ports and shipping lanes are affected.

London's International Petroleum Exchange was closed and will reopen Wednesday. On Friday, Brent crude futures sagged 60 cents to $40.11 a barrel.

Over the past month, the energy market has zeroed in on the severity of the of Northern Hemisphere winter and the consequent strength of demand for oil products, especially heating oil, stocks of which are lower than at this time last year.

The Energy Department releases its next petroleum supply report on Wednesday.

The weather and stockpiles watch come after a year when crude costs were pushed to a series of record highs, as global demand remained robust while spare production capacity was reduced to multiyear lows.

At the same time, concern flared about supply disruptions in Russia, Nigeria, Venezuela and Iraq.

Crude futures prices peaked at more than $55 a barrel in October, but have since retreated as stockpiles have risen and as U.S. weather has so far remained relatively mild.

Stocks up on Better Christmas Sales Reports

Investors responded to reports of better holiday sales by pushing stocks upward Monday, extending last week's holiday rally.

Wall Street was pleased with the increase in sales most retailers reported late last week and in post-holiday shopping. Although the gains still were modest, they were enough to give investors reason to hope for decent returns. Wal-Mart Stores Inc. saw sales rise modestly, and Amazon.com Inc. reported record sales during the holiday season.

``When you take a look at online sales and the phenomena of gift cards, and you put it all together, it appears it was a solid retail sales spending spree for the Christmas season,'' said Joseph Keating, chief investment officer at AmSouth Asset Management. ``And when you look at the underpinnings of the economy, they're still solid, too.''

In late-morning trading, the Dow Jones industrial average rose 20.54, or 0.2 percent, to 10,847.66.

Broader stock indicators were moderately higher. The Standard & Poor's 500 index was up 2.16, or 0.2 percent, at 1,212.29, and the Nasdaq composite index gained 5.54, or 0.3 percent, to 2,166.16.

Last-minute shoppers might have helped the retail sector exceed its diminished expectations for the year. According to SpendingPulse, a division of MasterCard International, retail sales rose 8.1 percent this holiday season, compared to a year ago. National Retail Federation was expecting 4.5 percent growth; its figures have yet to be released.

Wal-Mart rose 84 cents to $53.39 after the retail giant reported that same-store sales, those at stores open at least a year, would rise 1 percent to 3 percent, in line with previous estimates. The company also noted strong demand for gift cards.

Amazon.com Inc. said demand for consumer electronics oustripped its book business for the first time during the holidays, the busiest season in company history. The online retailer also said it set a single-day sales record during the period with more than 2.8 million units, or 32 items a second, ordered across the globe. Amazon.com surged $2.02 to $40.95.

Other retailers also made gains. J.C. Penney & Co. Inc. climbed 11 cents to $40.11, Federated Department Stores Inc. gained 64 cents to $55.88; Sears, Roebuck and Co. rose 72 cents to $52.22; and May Department Stores Co. was up 35 cents at $29.05.

Sirius Satellite Radio Inc. rose 38 cents to $8.33 after it reached 1 million subscribers. It credited holiday sales of its radios and pay services.

Advancing issues barely outnumbered decliners on the New York Stock Exchange, where volume came to 255.31 million shares, compared with 312.33 million at the same point on Thursday.

The Russell 2000 index of smaller companies was down 0.54, or 0.1 percent, at 648.83.

Overseas, Japan's Nikkei stock average fell 0.03 percent. In afternoon trading, Britain's FTSE 100 was up 0.22 percent, Germany's DAX index slipped 0.01 percent, and France's CAC-40 rose 0.09 percent.

Dollar Falls to New Low Against Euro The dollar fell to a record low Monday against the euro, which spiked to 1.3600 as the dollar's slide continued in thin, post-Christmas trading.

The euro's new high in early New York trading surpassed the previous mark of $1.3548 set on Friday in light pre-holiday trading.

The sharp rise in the euro was helped by Monday's low liquidity, which was about half of that on a normal day, said Chris Callander, a senior foreign exchange analyst at CMC Group in New York.

Also, traders were encouraged by talk among analysts that the euro could hit $1.50 or $1.60 by the end of 2005, Callander said.

However, with market movements so exaggerated due to low volumes, he does not expect the euro to climb rapidly for much longer.

``There are support levels at around $1.35, but there's less support than there is resistance at around $1.36, $1.37,'' he said.

``In a low-liquidity market, it can revert very quickly,'' he added.

The dollar has fallen steadily against the euro and other major currencies in recent weeks on worries over the large U.S. trade and budget deficits, factors that can undermine a country's currency. With no short-term fix for those deficits in sight, many analysts expect the dollar to continue weakening and some have predicted a euro level of $1.40 or higher by the end of 2005.

Though Washington professes a ``strong dollar'' policy, most observers believe the U.S. government is content to see the dollar fall because it makes U.S. exports cheaper and can help export-dependent sectors of the economy.

It's feared the stronger euro could hurt Europe's economy by making exports more expensive. On the other hand, it helps cool inflation by making imports - particularly oil, which is priced in dollars - cheaper.

Other consequences include higher costs of living for Americans abroad. The U.S. military has given troops stationed in Europe a 31 percent increase in their cost-of-living adjustments to help make up for the diminished purchasing power of their salaries.

© 2004 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.

Editor's note: